The Leaflet: Will Federal Ruling Halt Medicaid Reform?

Published April 5, 2019

Utah is the ninth state to receive approval for its Medicaid work requirement waiver. On March 29, Centers for Medicare and Medicaid Services Administrator Seema Verma approved Utah’s Section 1115 demonstration waiver, which would require childless, able-bodied adults to meet certain conditions to obtain state health coverage through Medicaid.

Although not as stringent as other approved work requirement waivers, Utah’s Section 1115 waiver would only require beneficiaries to search for jobs or participate in a training program within the first three months of a benefit year.

The waiver is unusual in two ways: (1) it would cap Medicaid enrollment for the expansion population if the state lacks funds, and (2) it would only partially expand Medicaid to adults with household incomes up to 100 percent of the federal poverty level, not the 138 percent level permitted under the Affordable Care Act. The limited expansion is estimated to cover 90,000 Utahans, 60,000 less than the 150,000 coverage estimate for the ballot initiative voters approved in November 2018.

Verma’s approval came two days after U.S. District Court Judge James Boasberg struck down work requirements in the Medicaid programs of Arkansas and Kentucky. The Trump administration contends work or community engagement as a condition of Medicaid eligibility promotes healthy behaviors, health care accountability, and financial independence in beneficiaries. Boasberg argued the decline in Medicaid enrollment due to work requirements is antithetical to the program’s core objective to provide medical assistance to needy populations, as outlined in the Social Security Amendments of 1965.

In 2018, Arkansas implemented reforms for able-bodied adults without dependents (ABAWDs) to either work, volunteer, or train for at least 80 hours per month. Since then, about 18,000 Arkansas residents have been removed from Medicaid rolls because they failed to meet the requirement.

A similar waiver in Kentucky has yet to go into effect because it has been blocked by federal lawsuits. However, Kentucky state officials estimate that 95,000 people would not be eligible for coverage if the waiver is implemented.

In 2013, Arkansas and Kentucky fully expanded their Medicaid programs to include ABAWDs. More than 420,000 Kentuckians enrolled in the expanded program. The new enrollees exceeded state projections by a whopping 134 percent and will cost Kentucky taxpayers an estimated $1.2 billion from 2017 through 2021. Nearly 300,000 residents are covered under Arkansas’ expansion, which will cost an estimated $1.9 billion by 2021.

Experts believe Utah’s letter of approval indicates the Trump administration will appeal the federal court decision. The ruling might threaten the future of Medicaid work requirements already approved in Arizona, Indiana, Michigan, New Hampshire, Ohio, and Wisconsin.

In “Don’t Wait for Congress to Fix Health Care,” Heartland Senior Policy Analyst Matthew Glans documents the failures of Medicaid and recommends innovative solutions states can adopt to reform the program, such as passing price transparency laws, creating high-risk pools, expanding health savings accounts, integrating direct primary care programs, and encouraging telemedicine.


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